How is it possible? I thought you can only lose what you put in. So 100% max. But I’ve seen news and posts about how people lose much more than that.
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A common way is leverage or margins, it’s a loan that you then use to buy stocks
So if you put in $100 and leverage another $100, you can purchase $200 of stocks even though you didn’t have that available yourself. Then if for instance the stock price quarters. Now your stocks are worth $50 to sell, but you still owe $100 back for your loan, if not more depending on terms. So in this example you’ve now lost $50.
The margins can get quite high, where it’s 5-10x the price of what you commit. As such the price fluctuations that will lose you money is much much less than what I gave an example of and has a much higher capacity for losing or gaining money too.
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